Key Insights

• Shenzhen Original Advanced Compounds' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 10 shareholders own 43% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of Shenzhen Original Advanced Compounds Co., Ltd. (SHSE:603991) can tell us which group is most powerful. The group holding the most number of shares in the company, around 57% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, individual investors were the biggest beneficiaries of last week's 19% gain.

Let's delve deeper into each type of owner of Shenzhen Original Advanced Compounds, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Shenzhen Original Advanced Compounds?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Shenzhen Original Advanced Compounds does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Shenzhen Original Advanced Compounds, (below). Of course, keep in mind that there are other factors to consider, too.

Shenzhen Original Advanced Compounds is not owned by hedge funds. Shenzhen Zhengxin Tongchuang Investment & Development Co., Ltd. is currently the largest shareholder, with 27% of shares outstanding. For context, the second largest shareholder holds about 4.0% of the shares outstanding, followed by an ownership of 2.7% by the third-largest shareholder.

On studying our ownership data, we found that 10 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Shenzhen Original Advanced Compounds

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can see that insiders own shares in Shenzhen Original Advanced Compounds Co., Ltd.. It has a market capitalization of just CN¥2.4b, and insiders have CN¥231m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 57% stake in Shenzhen Original Advanced Compounds, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

Our data indicates that Private Companies hold 27%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we've spotted with Shenzhen Original Advanced Compounds (including 2 which don't sit too well with us) .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.